On Wednesday (14 December 2022), U.S. Senator Cynthia Lummis (R-WY) explained during a hearing of the Senate Banking Committee that the failure of FTX does not mean that crypto is guilty since fraud is fraud regardless of how it is committed.

According to a press release issued on 7 June 2022, “U.S. Senators Kirsten Gillibrand (D-NY), member of the Senate Agriculture Committee, and Cynthia Lummis (R-WY), member of the Senate Banking Committee, introduced the Responsible Financial Innovation Act, landmark bipartisan legislation that will create a complete regulatory framework for digital assets that encourages responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law.”

According to a report by CoinDesk, on 7 December 2022, during an interview on CoinDesk TV, Lummis — who plans to reintroduce her bipartisan bill next year — said that “it’s starting to look more like bitcoin is the only thing that would qualify as a commodity,” and that Ethereum might be “a security because of the way [it] moved from proof-of-work to proof-of-stake,” with the “inability to [unstake tokens] right now” making it “susceptible to being [considered] a security.”

On 14 December 2022, during the “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers” hearing of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Lummis said:

We are conflating topics today. Digital assets are not on trial. Fraud and organizations are on trial. So, let’s separate digital assets from corrupt organizations. FTX, as i’ve been saying for the last few weeks, is good old-fashioned fraud. And what they did is separate from digital assets. Now, we’ve all heard that FTX lent its executives hundreds of millions of dollars in co-mingled customer funds for personal use, and customers who tried to wire money to FTX were instead given Alameda’s routing number.

That is fraud. That’s fraud whether it’s conducted in U.S. dollars, or euros, or digital assets. That is fraud. Additionally, even though FTX was a multi-billion dollar enterprise, it had a shocking lack of corporate controls and enabled affiliates to conceal the movement of money and take on enormous liabilities enabling the misuse.

Well, they misused customer assets that were supposed to be appropriately safeguarded… FTXis a failure of people, safeguards, and regulation. It’s not a failure of technology. The people of the digital asset industry need to get really serious about risk management and compliance with things like anti-money laundering laws.